More than 100 Canadian business leaders vow to sell off Russian investments — and call on other investors to do the same
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This article was published 02/03/2022 (394 days ago), so information in it may no longer be current.
As Russian tanks rolling through Ukrainian cities meet fierce local resistance, some of Canada’s top business leaders are fighting the invasion another way — by pulling their money out of Russia.
More than 100 of Canada’s top business leaders and investment managers have signed a letter vowing to sell off all of their Russian investments, and are calling on others investors to do the same.
The open letter to Prime Minister Justin Trudeau, Deputy PM Chrystia Freeland, and Minister of Foreign Affairs Melanie Jolie, was written as the deadly toll of Russia’s invasion of Ukraine continues to mount.
“We want to express our deep sorrow, concern and apprehension over the situation in Ukraine. We, like so many Canadians, have an undeniable urge to do all we can to support those who are suffering,” said the letter, which was written by Purpose Investments CEO Som Seif and Wealthsimple CEO Michael Katchen, and published in the Star Tuesday.
In an interview, Seif said business leaders have a moral obligation to push back against Russia’s invasion, and Russian President Vladimir Putin.
“As individuals we have to take a stand against this, and we have to fight as best as we can on behalf of the Ukrainian people. They are fighting and defending their home and their freedom, and we have to do our job. If we’re not going to have people there, we have to fight with every other power we can,” said Seif, whose fund management company has already sold off stock it held in Russian companies.
Purpose, which manages an estimated $14 billion in investments, has also started selling off its shares of non-Russian companies which have significant holdings in Russia, including Toronto-based Kinross Gold.
“We sold down positions like Kinross Gold, and others last week, because we said ‘we don’t believe that’s the right decision, to have exposure to a company that has meaningful position in those markets,’ ” said Seif, adding that the first choice was to have a conversation to give companies an opportunity to divest their Russian holdings.
“In some cases, we’ve called and told management, ‘we will be selling them unless they have a plan.’ In some cases like Kinross, we just sold it outright, because … they’re not going to be able to do the right thing. They’ve got such a meaningful stake in a mine in Russia that’s just basically illiquid and they’re not going to be able to do anything,” said Seif.
A day before Russia’s Feb. 24 invasion, Kinross announced that its mining operations in Russia’s Far East were operating as normal, and that the company expected 13 per cent of its gold production this year to come from Russia.
Kinross didn’t reply to a request for comment for this article.
Tuesday, the Alberta Investment Management Corp. — one of the country’s biggest institutional investors — said it was pulling out of Russia. AIMCo estimated that it had roughly $99 million in Russian assets.
Anthony Schein, director of shareholder advocacy at SHARE, a non-profit organization that advises institutional investors on ethical, social and governance issues, says Russia’s invasion of Ukraine makes it clearer than ever that ethical considerations should be a key part of investment decisions.
“Consumers pay a lot of attention to what products they buy. I think a lot more are now paying attention to what they choose to invest their money in,” said Schein, adding that many of SHARE’s clients are taking a close look at how to withdraw from any Russian investments.
“A lot of the investors we work with are having those conversations right now,” said Schein.
Ethical concerns, however, are sometimes trumped by more traditional business metrics, such as return on investment, says Eric Kirzner, professor emeritus of finance at U of T’s Rotman School of Business.
“I think it’s great that there are places which ethical investors can put their money into. And what’s happening in Ukraine is a tragedy,” said Kirzner. “But pension plans have beneficiaries. Mutual funds have unitholders. And the managers have a responsibility to get the best returns they can.”
Not that he’s arguing for keeping investments in Russia.
“If they feel like the outlook is changing, that’s a perfectly good business reason for pulling their investments,” Kirzner said.
A change in the economic outlook, says Seif, was one consideration.
“Look at the sanctions that are going to have huge economic impacts on the Russian economy and therefore Russian businesses. So anyone who has assets in that region, one, they’re going to be very illiquid and two, they’ll become much less valuable,” said Seif.
Seif’s ultimate decision, however, was guided by morality.
“If anyone can sit there and watch what’s happening and your conscience can say ‘allocating capital in Russia is the right thing to do in this time,’ I would love them to come and talk to me. Anyone who takes advantage of moments like this to their profit, in my opinion, has to answer transparently to their customers.”
Josh Rubin is a Toronto-based business reporter. Follow him on Twitter: @starbeer